DMart Q4 net profit jumps 53%; over 80% stores disrupted by 2nd Covid wave

Total income rises 19% to Rs 7,460 cr

Avenue Supermarts, which owns the hyper-retail chain DMart, on Saturday reported 53% increase in consolidated net profit at Rs 414 crore for the quarter ending March 31, 2021. It was Rs 271 crore in the year-ago period. 

Total income rose 19% to Rs 7,460 crore from Rs 6,291 crore a year ago. 

Total revenue for the quarter ended March 31, 2021 stood at Rs 7,412 crore, as compared to Rs 6,256 crore in the same period last year. Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) in Q4FY21 stood at Rs 613 crore, as compared to Rs 417 crore in the corresponding quarter of last year. EBITDA margin stood at 8.3% in Q4FY21 as compared to 6.7% in Q4FY20. 

Avenue Supermarts' total expenses were at Rs 6,916.24 crore, up 16.09 per cent as against Rs 5,957.53 crore a year ago.

On a standalone basis, Avenue Supermarts' net profit was up 51.62 per cent to Rs 434.95 crore, against Rs 286.87 crore of the corresponding quarter of the last fiscal.

Its revenue from operations on a standalone basis during the quarter was at Rs 7,303.13 crore, up 17.92 per cent in comparison to Rs 6,193.53 crore a year ago.

Net profit stood at Rs 1,099 crore for FY21, as compared to Rs 1,301 crore in FY20. PAT margin stood at 4.5% in

FY21 as compared to 5.2% in FY20. Basic Earnings per share (EPS) for FY21 stood at Rs 16.97 as compared to Rs 20.71 for FY20. 

"FY2021 has been a challenging year for our business. The year began amidst a strict lockdown post the emergence of the Coronavirus (Covid-19) towards the end of the last financial year. The economy gradually opened post May 2020 and the second half of the year was progressing towards recovery. However, a much stronger second wave of Covid-19 infections hit the country towards the end of FY2021 and has once again resulted in significant disruption to our business as several cities and towns have announced restrictions," said Neville Noronha, CEO & Managing Director, Avenue Supermarts Limited.

In a stock exchange filing, Noronha also spoke about the impact of second coronavirus wave on DMart's operations.

"Significant disruptions have been seen from March 2021 onwards for our store operations. The restrictions and local level enforcements have become much stricter. Restrictions vary from store closures on certain days or for extended periods, to restricted store operating hours and selling only essential goods in most cities and towns. In general, more than 80% of our stores are operating for significantly lower number of hours (not exceeding four hours per day) or are even shut for operations for one to weeks or shut on weekends. These shut downs are having an adverse and severe impact on our revenues," he said.  

"We continued the expansion of our e-Commerce business and increased our presence across the MMR region. In addition, we commenced servicing 4 new cities during the last year - Ahmedabad, Pune, Bangalore and Hyderabad. We currently continue to receive regular supply of goods from our suppliers. However, this time we may have a problem of excess inventory. An issue larger than the first wave. The receding threat of the pandemic and consequent sales surge in Q3 and most of Q4, followed by the oncoming summer and back to school season made us plan more optimistically. This could have a longer-term impact on our inventory to sales ratio as we could take comparatively longer time to liquidate the excess inventory," said Noronha about the supply chain issues the company is facing. 

Noronha also said that sales from general merchandise and apparel formed 23% of the company's total revenue for the year as compared to 27.31% in the previous year.

"This is a result of consumer preference of need based / essential goods shopping for a significant period during the year, reduced discretionary spending and significant restrictions on selling non-essentials during the early part of the year. This has also impacted our margins during the year. However, Q4 margins did indicate revival of discretionary spends not seen in previous 3 quarters," said Noronha.

Over the addition of new stores, Noronha said its construction activity was impacted during the first half of the year.

"We gradually commenced our store construction activity from the second half of the year and opened 22 new stores during the year," he said.

As of March 31, 2021, Avenue Supermarts was operating 234 operating stores with a total retail business area of 8.82 mn sq ft.

On Friday, the company's scrip on BSE closed trading 0.4% higher at Rs 2,889.